Best One Year Business Bond Rates

1 year business bonds explained

What is a one-year business savings bond?

A one-year business savings bond is specifically designed for business rather than personal savings, but operates in a similar way. You’re asked to set aside a lump sum of money for 12 months, during which time you won’t be granted access, but in return will receive a competitive rate of interest.

Interest is typically paid yearly or on maturity – though you may find a few options that pay interest monthly – and you’ll need to deposit a single lump sum, with minimum deposit requirements usually far higher than for personal accounts. Note that you’ll need to meet the account’s criteria in order to be eligible, which can include:

• Some may only be offered to certain business types, such as limited companies, charities, clubs or farm businesses
• Minimum and maximum turnovers may apply
• Minimum and maximum investment amounts
• Some may ask you to be an existing customer and/or have a linked current account

Can I withdraw my savings during the term?

No. Once the lump sum is deposited it must remain untouched for the 12-month term, with early access rarely allowed. Some providers will permit additional deposits, but this will usually only be for a limited period.

How is the interest on business savings bonds paid?

This can vary between providers, but interest is typically paid annually or on maturity. Some accounts pay interest monthly, which could be suitable for those businesses looking to gain additional income from their savings.

What happens if interest rates change during the one-year term?

If interest rates fluctuate, yours will remain unchanged. This is because one-year business bonds are fixed rate accounts, which means the interest rate cannot change during the term. This gives rate security while ensuring that future cashflow projections can be accurately managed – funds will always be earning interest at the agreed rate, which means you’ll know exactly how much you’ll earn by the end of the 12-month period. 

What is a business savings bond used for?

As a business, 1 year fixed rate bonds can be used to lock away a portion of your savings for guaranteed returns after one year. Perhaps you’ve got expansion plans and want to maximise the amount of interest you can earn in a year, or are planning for additional expenses in a year’s time (such as new equipment or marketing campaigns). Or you may simply have surplus cash you don’t need access to that could be working harder, as keeping it in a standard business current account will rarely offer any form of interest.

Is fixing for one year a good idea?

If you’re considering business bonds, 1 year could be the ideal time commitment if you don’t mind losing access to a portion of your savings for a set term. Your business’ funds will be earning interest at a fixed rate and so you’re guaranteed to earn the amount expected, ensuring your money is working as hard as possible. One year is a relatively short timeframe to lose access as well, so could offer the ideal solution for many businesses.

The drawback is that the money will be wholly inaccessible during the year, which means this kind of bond is only suitable for companies that have a comfortable level of financial cushioning elsewhere. For those which have more near-term plans, a business bond of up to one year could be more suitable, while those thinking longer term could consider a four- or even five-year business savings bond instead.

How do interest rates on one-year savings bonds compare to other periods?

Historically, short-term bonds paid much less than their longer-term counterparts, but that’s no longer the case. In fact, the best one-year fixed rate business bonds now easily outpace the rates on longer-term deals, which means you’ll be able to secure a highly competitive rate without a lengthy commitment. However, the risk of only locking your money away for a year is that rates could fall within that time, which means if you then wanted to opt for another fixed rate term you’d be earning a lot less.

What's the average amount required to open a one-year business savings bond?

The amount required to open business accounts can vary between providers, but you’ll often have to set aside a much larger sum than you would for personal savings accounts. Minimum deposit requirements of £10,000 and even £20,000 are not uncommon, so it’s important to make sure your company can afford to lose access to this amount for the full term.

Which bank offers the best rate?

There’s no easy answer to this, as rates can change quickly in the savings market, with providers continually re-evaluating their offers. This is why it’s so important to act quickly when you spot the best 1 year fixed rate business bonds, as they may not be around for long.

There are a lot of high street brands active in this sector, with names such as Santander, Virgin Money and Bank of Scotland all offering one-year business savings bonds. However, the very best rates are rarely offered by well-known UK banks and building societies. Indeed, take a look at our chart and you’ll see it’s often the smaller, challenger providers that take the top spot, so it’s always worth considering these brands as well as the big names. Read our guide to challenger banks to find out more, and start your comparison to find the best one-year business bonds in the UK.